IBM

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IBM has evolved from a computer manufacturer into a provider of software, cloud computing, AI, and consulting services.

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IBM is an American technology company that provides software, consulting, computing infrastructure, cloud computing, and artificial intelligence products and services for businesses, governments, and other organizations. Headquartered in Armonk, New York, the company operates in more than 175 countries and had 264,300 employees as of 2025. Its common stock trades on the New York Stock Exchange under the ticker symbol IBM.

IBM organizes its operations into four business areas:

Software. This unit develops AI, automation, data management, transaction processing, and cybersecurity software. Its products include Red Hat software for cloud computing and watsonx, which helps businesses develop, deploy, and manage AI applications and models.

Consulting. IBM Consulting provides technology and business consulting services, helping organizations adopt cloud computing, AI, and other digital technologies.

Infrastructure. The company’s infrastructure division includes IBM Z mainframes, Power servers, storage systems, and related support services.

Financing. IBM’s financing segment helps customers acquire IBM products and services through financing and leasing programs.

The precursor to IBM was incorporated in 1911 as the Computing-Tabulating-Recording Company in a consolidation of three smaller companies that made punch-card tabulators and other office products. The company assumed its present name in 1924 under the leadership of Thomas Watson, a man of considerable marketing skill who became general manager in 1914 and gained complete control of the firm by 1924.

Watson built the floundering company into the leading American manufacturer of punch-card tabulating systems used by governments and private businesses. He also developed a highly disciplined and competitive sales force that adapted the company’s custom-built tabulating systems to the needs of particular customers.

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Introduced in 1954, the IBM 650 became the first mass-produced computer and one of the most widely used systems for business and scientific applications.

IBM Archives

In 1933, IBM purchased Electromatic Typewriters, Inc., and thereby entered the field of electric typewriters, in which it eventually became an industry leader. During World War II, IBM helped construct several high-speed electromechanical calculators that became precursors of electronic computers. But it refrained from producing these electronic data-processing systems until Watson’s son, Thomas Watson, Jr., became president of the company in 1952 and sponsored an all-out push into that field.

Having entered the computer field, IBM’s size allowed it to invest heavily in development. This investment capability, added to its dominance in office-calculating machines, its marketing expertise, and its commitment to repair and service its own equipment, allowed IBM to quickly assume the predominant position in the American computer market. By the 1960s it was producing 70% of the world’s computers and 80% of those used in the United States.

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Introduced in 1981, the IBM Personal Computer (PC) helped establish a standard for business computing and became one of the most influential personal computers of its era.

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IBM’s specialty was mainframe computers—i.e., expensive medium- to large-scale computers that could process numerical data at great speeds. The company didn’t enter the growing market for personal computers until 1981, when it introduced the IBM Personal Computer.

Although it was not the first personal computer, the IBM PC’s credibility was established by the company’s reputation, encouraging companies to adopt them for office work. Built largely from readily available components and accompanied by published technical specifications, it encouraged other companies to develop compatible software, peripherals, and machines. The resulting ecosystem made the IBM PC architecture an industry standard and brought Microsoft’s MS-DOS operating system to a mass market. More than 750,000 IBM PCs were sold within two years.

The PC achieved a major share of the market, but IBM was nevertheless unable to exercise its accustomed dominance as a maker of personal computers, partly because the same design choices that accelerated its adoption also enabled competitors to manufacture cheaper or more advanced “IBM-compatible” computers, eventually weakening IBM’s control of the market. Additionally, new technologies based on semiconductor chips were making computers smaller and easier to manufacture, allowing smaller companies to enter the market and exploit new developments such as workstations, computer networks, and computer graphics.

IBM’s enormous size hindered it from responding rapidly to these accelerating rates of technological change, and by the 1990s the company had downsized considerably. In 1995, IBM purchased Lotus Development Corporation, a major software manufacturer.

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World chess champion Garry Kasparov lost to IBM’s Deep Blue in their 1997 rematch, the first time a reigning world champion was defeated by a computer under standard tournament conditions.

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In 2002, IBM sold its magnetic hard drive business for $2.05 billion to Japanese electronics company Hitachi, Ltd. Under the terms of the sale, IBM agreed to continue producing hard drives with Hitachi for three years in a joint venture known as Hitachi Global Storage Technologies. In 2005, Hitachi took full control of the joint venture and IBM stopped building a device that it had invented in 1956.

In May 2005, IBM sold its personal computer division to Lenovo Group, a major Chinese manufacturer. In addition to cash, securities, and debt restructuring, IBM acquired an 18.9% stake in Lenovo, which gained the right to market its PCs under the IBM label through 2010.

With these divestitures, IBM shifted away from manufacturing so-called commodity products to concentrate on its computer services, software, supercomputing, and scientific research divisions.

In addition to producing supercomputers for governments and large corporations, IBM’s supercomputer division, in cooperation with the Toshiba Corporation and the Sony Corporation (SONY) of Japan, designed the Cell Broadband Engine. Developed over a four-year period beginning in 2001, the chip was used in IBM supercomputers as well as Toshiba high-definition televisions and Sony PlayStation 3 electronic game consoles.

IBM also designed the computer chips for the Microsoft Corporation (MSFT) Xbox 360 and the Nintendo Company Wii game systems. IBM became the first company to generate more than 3,000 patents in one year (2001) and, later, more than 4,000 patents in one year (2008).

Beginning in the late 2000s, IBM accelerated its transformation from a computer hardware manufacturer into a company focused on software and technology services. The company launched its Smarter Planet initiative, promoting the use of data analytics and interconnected computing systems to improve the efficiency of businesses, governments, and public infrastructure.

In 2011, IBM drew worldwide attention when its Watson computer system defeated the two greatest champions on the television quiz show Jeopardy!, demonstrating advances in artificial intelligence and natural language processing.

IBM subsequently expanded its investments in cloud computing and AI technologies, including the 2013 acquisition of cloud computing company SoftLayer Technologies. During the same period, the company continued divesting its hardware businesses, agreeing to sell its x86 server business in 2014 and completing the sale of its semiconductor manufacturing business to GlobalFoundries in 2015.

IBM continued to expand its cloud computing and AI businesses during the late 2010s. In 2018, the company agreed to acquire Red Hat, Inc., completing the $34 billion purchase the following year. The acquisition made Red Hat central to IBM’s cloud computing strategy and expanded IBM’s line of cloud software products for businesses.

To sharpen its focus on software, cloud computing, and AI, IBM unveiled plans in 2020 to spin off its managed infrastructure services business into a separate publicly traded company. The new company, Kyndryl Holdings (KD), began operating independently in 2021.

In the early 2020s, IBM increasingly emphasized enterprise AI and quantum computing while continuing to expand its software business through acquisitions. In 2023, the company introduced watsonx, software tools for developing and deploying AI applications for businesses.

IBM also continued investing in quantum computing, which it viewed as a long-term growth area. Further, it expanded its AI and cloud computing businesses through acquisitions, including infrastructure software company HashiCorp in 2025.